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Though Sri Lanka belongs to one of the 34 biodiversity hotspots of the world, its microfolora specially fungi are not well studied and underrepresented in the global literature. Here we report the fungal species diversity of decaying hardwood of a Sri Lankan dry zone forest for the first time. Decaying hardwoods were collected from historically important Dimbulagala forest reserve, Sri Lanka and fungi associated with these woods were isolated. Out of 35 fungal species identified using morphological and molecular methods, 11 species were first records in Sri Lanka. All the tested isolates were able to utilize wood as the sole carbon source and produced varying degrees of laccase. Isolates of Perenniporia tephropora, Coriolopsis caperata, Gymnopilus dilepis, Fusarium solani and Vanderbylia fraxinea were among the top six laccase producers. Except Fusarium solani, the rest of the isolates showed more than 70% decolorization of the of triphenylmethane dye and there was a significant positive correlation between laccase production and dye decolorization. To the best of our knowledge laccase production and dye decolorization ability of Vanderbylia fraxinea and Gymnopilus dilepis have never been reported in the fungal kingdom before. Perenniporia tephropora was isolated from one of the strongest decay resistant hardwood species, Ebony (Diospyros ebenum) also known as dark wood and V. fraxinea was isolated from another medicinally important hardwood Neem (Azadirachta indica). Findings of this study confirms that decaying hardwood of Sri Lanka provide unexplode a unique niche for discovering fungal species with biotechnological applications such as high laccase producers and dye decolorizers.

A selection of basidiomycetes collected in oil palm plantations of South East Asia is briefly characterized and illustrated. Most are saprobic fungi and wood degraders with a broad range of substrates and are not confined to palms.